Credit card spending has topped €1 billion a month for the first time. Figures released by the Central Bank yesterday show that in December €1.05 billion was spent on credit cards as total private sector borrowing recorded its highest ever monthly jump.

Total private sector debt increased to a record €258.9 billion at the end of the year, with a net €6.6 billion being borrowed in December alone.

The annual increase in borrowing of €59 billion compares with an increase of €39 billion in 2004. In percentage terms, private sector credit growth increased by 28.8 per cent last year.

The end-year figures showed a fractional slowing on November when the rate of growth was 29 per cent and broadly in line with the percentage growth in 2004.

Residential mortgage lending rose by over €21 billion, reaching a new high of €94.3 billion in December, up 28.5 per cent over the year. Again, the December increase of €3.5 billion was the strongest monthly increase on record.

Bloxham economist Alan McQuaid said the monthly mortgage figure was "boosted somewhat by the reclassification by two credit institutions of over €900 million into residential mortgages".

Non-financial corporations borrowed an extra €25 billion.

Non-mortgage credit, which since July last year has risen faster than mortgage lending, slowed in percentage terms from November's 30.5 per cent growth to 28.8 per cent.

An extra 152,000 credit cards were issued last year.

While the rate of increase of credit card debt slowed slightly towards the end of the year, outstanding card debt stood at €2.3 billion at year-end, up 15.4 per cent on the year.

The statistics also reveal that the Central Bank's holdings of foreign exchange continue to fall to new lows as it switches assets from foreign currencies into euro-denominated assets.

According to the Central Bank's balance sheet, its reserve position has fallen from a level of €2.3 billion in October to €641 million in December, one of the sharpest falls in almost three years.

The balance sheet shows that the bank's holdings of euro- denominated securities increased over the same period.

Some market participants interpret this as an unwinding of Central Bank holdings of non-euro EU currencies such as sterling and the Danish kroner over the period.

The Central Bank did signal in its latest annual report that it would reduce its holdings of foreign currency.

The continued borrowing surge has caused money supply in Ireland to grow at more than twice the rate for the euro zone as a whole.

The standard M3 measure - which includes banknotes, coin and liquid deposits - grew by just under 20 per cent in the final months of last year, compared with growth of around 8 per cent in the euro zone.

The measure is used by the European Central Bank to monitor long-term inflationary pressures and is influential in determining its interest rate policy.

The rate of money supply growth across the euro zone - seen as strong - was cited recently by Bank of Ireland and Irish Intercontinental Bank (IIB) economists as one of the reasons why the ECB is widely expected to increase interest rates later this year.